World Bank keeps Philippine growth forecasts

WORLD BANK ECON UPDATE: World Bank lead economist Birgit Hansl answers queries from the press after giving an economic update on the Philippines. Also in photo is economist Kevin Chua. MIKE AMOROSO. Photo: PhilStar

MANILA, Philippines - The World Bank has retained its three-year economic growth forecasts for the Philippines, but stressed these projections can be exceeded if the government can ramp up its infrastructure spending as planned and provide clarity on its economic policies.

Drawing from its earlier forecast in April, the multilateral lending institution said it still expects the Philippine economy to grow 6.4 percent this year and 6.2 percent in the next two years.

In its October update on the domestic economy titled “Outperforming the Region and Managing the Transition,” the World Bank said the country has weathered the challenging global economy and grown at a rapid pace over the past five years, “supported by strong macroeconomic fundamentals and a highly competitive workforce.”

Domestic consumption is seen to prop up the economy driven by increased purchases from an expanding middle class, remittances from overseas Filipino workers, and increased employment.

“The economic outlook is optimistic with risks tilted to the upside,” said the report, noting “substantial” improvements in macroeconomic stability by way of low and stable inflation rates, prudent fiscal management, and comfortable level of foreign reserves.

The proposed budget for 2017 would increase infrastructure spending to 5.4 percent of gross domestic product (GDP) in order to address infrastructure bottlenecks and “enhance connectivity between the country’s wealthier and poorer areas.”

“This can boost a large segment of the economy including industrial activities, real estate, construction and tourism,” said the report.

The world bank said while the new administration’s 10-point socioeconomic agenda has been generally well-received as it signals continuity of the existing macroeconomic framework, the government still needs to dispel lingering uncertainty on the part of investors by providing clarity on it development priorities.

“The preliminary agenda is intended to bolster the government’s current, fiscal, monetary and trade policy stances, while prioritizing tax administration reforms. Despite these reassurances, however, a degree of uncertainty remains regarding the ultimate direction of macroeconomic policy. The short-term challenges is how to successfully manage the economic transition and providing the right signals to investors and businesses,” said the report.

In a briefing yesterday, World Bank lead economist Birgit Hansl said the completion of the 2017-2022 medium term development plan for the country is expected to provide investors with direction.

“Many reforms are being unveiled, specifically on tax policy and administration, the tracking of government spending, security of land tenure, ease of doing business, and restrictions on foreign participation,” she said. “But as policy details are still being discussed, some businesses might remain cautious. The completion of the new Philippine Development Plan this year will provide more clarity on the government’s development priorities and further improve the country’s growth prospects.”

The government is also pursuing a comprehensive tax reform effort that promises to make the tax system more equitable and efficient.

Hansl said that while the country’s macroeconomic fundamentals remain strong, the government should also pay attention to microeconomic reforms such as improving the ease of doing business in the Philippines to sustain growth.

“So here it will be really important to see what will be the priority of the new administration. Will it be trade facilitation, will it be changing how businesses operate. These involves also labor market issues,” she said.

She declined to comment on prevailing labor issues but said the bank is encouraged by the ongoing dialogue on issues such as contractualization and minimum wage setting.

In a statement, World Bank country director Mara Warwick said macroeconomic stability puts the Philippines in a position to accelerate inclusive growth that benefits all Filipinos.

“Poverty will decline faster if the returns from economic expansion are invested in building human capital by strengthening health, education, and social protection,” she said. - PhilSTAR

About
Makisig Bayani

I am among of the writers and administrators of this web site. I always on the heads up when it comes to Sports, Politics, Economy, Business, Physics, Mathematics, Technology, computers and NEWS all over the world that triggers ny eyes and interests. I am working as a volunteer with other 14 administrators, researchers, writers and contributors. We are a strong solid team. Join us and be among of the contributor with your name on each posted article.

RELATED POSTS

YOU MAY LIKE TO READ

LEARN FOREX TRADING AND GET RICH

Live trading with Bitcoin through ETORO Trading platform would allow you to grow your $100 to $1,000 Dollars or more in just a day. Just learn how to trade and enjoy the windfall of profits. Take note, Bitcoin is more expensive than Gold now.

For outside the Philippines customers may buy Bitcoins online atCoinbase.com

Happy 9th Year Anniversary "PESORESERVE.COM"

Founded on June 22, 2009 as "Rebuilding for a Better Philippines" aimed to educate the Filipinos how to love our country, how we lost Sabah North Borneo, and reinvigorating the burning heart of our Kababayans and fellow OFWs to love our "Bayan" our country; now we are at our 9th year of existence..